IUL - Indexed universal life

Indexed Universal Life

There’s a guy out there with a blog titled “5 Reasons Not to Buy Indexed Universal Life Insurance,” and at first I thought it might be a great chance to go through and address his points one by one. But after reading it, I figured—why bother? It’s clear he just doesn’t get it. Sure, people with experience in certain areas can offer valid perspectives, but telling everyone that a single financial product is always wrong (or always right) is like an ice cream expert trying to tell me what my favorite flavor is. It’s personal. It depends on the individual.

What's an IUL?

An IUL (Indexed Universal Life) is a FIXED cash value life insurance product designed to build value over time. It doesn’t come with a premium guarantee (which, for UL products, I usually recommend), but if you regularly review your policy and avoid underfunding it, you should be just fine. And if you’re paying attention, you’ll have options to protect the policy even if the non-guaranteed elements change over time.

In my opinion, an IUL can be a great component of a broader strategy. I don’t personally own one—I have a UL policy—but mine has worked well. A couple of years ago, I needed funds and took a loan from my policy, then paid it back. The best part? No taxable event. Everyone complains about policy costs, but meanwhile the government is taking a third in taxes. I also like knowing that while I’m now 15 years into a 30-year term policy, I’ve got options when that ends—options that 60-year-old me might be very glad I kept open.

Now, if I were to go through every technical detail of an IUL, it might cure your insomnia. So instead, here’s the short version: I’m not a big fan of whole life (outside of small burial policies), because I don’t see much opportunity there. But with an IUL, I do. And if the non-guaranteed projections actually play out, you’re looking at roughly a 2% cost spread to get solid life insurance for your family—plus some pretty attractive tax benefits you’ve probably read about elsewhere. Life insurance is like politics: neither extreme is completely right, and the truth usually lives somewhere in the middle.

Lastly, there’s a smart way to buy these policies—and there’s everything else. Ask yourself: “What’s the smallest policy I can get for $X per month?” Pair that with a term policy to make sure your family has the total coverage it needs, and you’re on track to a well-rounded strategy. You can request info on our quote page, but don’t be surprised if we give you a call first. After all, you wouldn’t want us to scoop your ice cream without talking flavors and toppings first, right?